Monday, January 31, 2011Last Update: 10:18 AM PT

Class Claims AT&T Rigs Bills for iPhones

SAN FRANCISCO (CN) - AT&T Mobility faces another federal class action involving its iPhone and iPad services. This one claims that "AT&T's bills systematically overstate the amount of data used on each data transaction involving an iPhone or iPad account," and bills customers for data transactions even if they disable their phones and leave them untouched - as the plaintiff's experts did. The class says AT&T's billing system "is like a rigged gas tank that charges pump that charges for a full gallon when it pumps only nine-tenths of a gallon into your car's tank." AT&T has faced a welter of class actions since rolling out its iPhone service with Apple, which is not named as a party to this complaint. Previous class actions have claimed AT&T charged for downloads its customers never made, reneged on its billing plans for iPhones, charged for services it could not or did not deliver, and promised but failed that the phones could send text messages and photos. In the new complaint, named plaintiff Patrick Hendricks claims that AT&T's overbilling "was discovered by an independent consulting firm retained by plaintiff's counsel, which conducted a two-month study of AT&T's billion practices for data usage, and found that AT&T systematically overstate web server traffic by 7 percent to 14 percent, and in some instances by over 300 percent. So, for example, if an iPhone user downloads a 50 KB website, AT&T's bill would typically overstated the traffic as 53.5 KB (a 7 percent overcharge) to as high as 150 KB (a 300 percent overcharge)." (Parentheses in complaint.) But wait, Hendrick's claim continues: "It gets worse. Not only does AT&T systematically overbill for every data transaction, it also bills for phantom data traffic when there is no actual data usage initiated by the customer. This was discovered by the same independent consulting firm, which purchased an iPhone from an AT&T store, immediately disabled all push notifications and location services, confirmed that no email account was configured on the phone, closed all applications, and let the phone sit untouched for 10 days. During this 10-day period, AT&T billed the test account for 35 data transactions totaling 2,292 KB of usage. This is like the rigged gas pump charging you when you never even pulled your car into the station." The class claims that though AT&T's overcharges "have a modest effect on an individual customer's bill, they have a huge effect on AT&T's bottom line. AT&T has 92,8 million customers. In the fourth quarter of 2010, AT&T reported its wireless data revenues increased $1.1 billion, or 27.4 percent, from the year-earlier quarter, to $4.9 billion. A significant portion of those data revenues were inflated by AT&T's rigged billing system for data transactions." Hendricks seeks restitution and class damages for money had and received, breach of contract, unjust enrichment, unfair and fraudulent business practices, unfair competition, and violations of the federal Communications Act. He is represented by L. Timothy Fisher with Bursor & Fisher of Walnut Creek.